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theshyftgroup.com

The Shyft Group Reports Second Quarter Results

Achieves record sales of $244 million and doubling of backlog to all-time high of $751 million; Reports EPS of $0.44 and adjusted EPS of $0.53

NOVI, Mich., Aug. 5, 2021 /PRNewswire/ — The Shyft Group, Inc. (NASDAQ: SHYF) (“Shyft” or the “Company”), the North American leader in specialty vehicle manufacturing, assembly and upfit for the commercial, retail and service specialty vehicle markets, today reported operating results for the second quarter ending June 30, 2021. 

Second Quarter 2021 Highlights from Continuing Operations1

For the second quarter of 2021 compared to the second quarter of 2020:

  • Sales of $244.0 million, an increase of $120.0 million, or 96.8%, from $124.0 million, reflecting increased sales in all product categories. 
  • Gross profit margin of 21.3% of sales, a 190 basis point improvement from 19.4% of sales, driven by sales volume and actions taken to improve overall operating efficiency. 
  • Income from continuing operations of $17.0 million, or $0.44 per share, compared to a loss of ($1.1) million, or ($0.03) per share
  • Adjusted EBITDA of $28.6 million, or 11.7% of sales, an increase of $19.2 million, or 205.6%, from $9.4 million, or 7.5% of sales. 
  • Adjusted net income of $19.0 million, or $0.53 per share, an increase of $14.4 million, or 316.1%, from $4.6 million, or $0.13 per share. 
  • Consolidated backlog at June 30, 2021, was a record $751.4 million, up $413.9 million, or 122.6%, compared to $337.5 million at June 30, 2020.

“The Shyft Group’s momentum continued to build in the second quarter, producing results that exceeded our expectations, including doubling our sales and tripling adjusted EBITDA over the prior year,” said Daryl Adams, President and Chief Executive Officer.  “Our strength in quality, innovation, and customer-driven product development, combined with rising demand in our markets, led to record backlog across all segments.  While the environment remains challenging, our team continues to outperform and delivered our highest quarterly sales on record. We continue to see strong demand in parcel delivery and luxury motor coach, as well as accelerating demand in service bodies, which further cement our plans toward continued growth in the second half of the year.”

1 The Company divested its Emergency Response (ER) business effective February 1, 2020.  Accordingly, the financial results of ER have been classified as discontinued operations for all periods presented. Unless otherwise noted, financial results presented are based on continuing operations.

Fleet Vehicles and Services (FVS)

FVS segment sales were $168.3 million, an increase of 73.1% from $97.2 million, mainly due to strong sales across all product categories, including strong demand for last-mile delivery vehicles and growth in the recently introduced Velocity™ product line. 

Adjusted EBITDA increased $14.6 million to $28.3 million, or 16.8% of sales, from $13.7 million, or 14.0% of sales, a year ago.  The increase was primarily due to higher volume and productivity driven by capital investments.

The segment backlog at June 30, 2021, totaled a record $660.9 million, up 130.3%, compared to $287.0 million at June 30, 2020.  On a sequential basis, backlog increased $71.3 million, or 12.1% from $589.6 million in the first quarter of 2021.  This increase reflects strong demand for delivery vehicles, including the Velocity product line.

Specialty Vehicles (SV)

SV segment sales were $75.7 million, an increase of 183.2% from $26.7 million, led by luxury motor coach chassis sales and accelerating growth in service bodies. 

Adjusted EBITDA increased $7.4 million to $8.6 million, or 11.4% of sales, from $1.2 million, or 4.6% of sales, a year ago.  The increase was primarily due to higher sales volume.

The segment backlog at June 30, 2021, totaled $90.5 million, up 79.1% compared to $50.5 million at June 30, 2020.  On a sequential basis, backlog increased $13.6 million, or 17.7%, from $76.9 million in the first quarter of 2021.  The increase reflects increased orders across all product lines.

Update 2021 Outlook

“In addition to our strong financial performance during the quarter, we continued to make investments that will drive productivity improvements and position us for future growth,” said Jon Douyard, Chief Financial Officer.  “Our current liquidity position remains healthy at $120.0 million, and our leverage ratio stands at just 0.4 times adjusted EBITDA, leaving ample room for further strategic investments.  While our strong order intake resulted in record backlog, we continue to manage through a challenging supply environment.  Despite this headwind, we are confident raising our guidance for the year to reflect the strong first-half performance and our team’s ability to meet customer needs through the second half.”

The Company expects full-year 2021 results from continuing operations to be as follows:

  • Revenue to be in the range of $900 to $950 million
  • Net income of $55 to $62 million
  • Adjusted EBITDA of $100 to $110 million
  • Effective tax rate of approximately 26%
  • Earnings per share of $1.52 – $1.72
  • Adjusted earnings per share of $1.75 – $1.95

“Our achievements during the first half of the year highlight our proven business strategy and our team’s capacity to execute.  This exceptional team continues to bring aptitude and energy to the organization and operate at the highest level, both from a day-to-day production and support standpoint, as well as in the areas of product research and development.  With the strength of demand in our core markets and the tremendous opportunities inherent in our new products coming to market – such as the Velocity and our recently announced all-electric battery powered EV chassis – we have never been more excited about the future of our Company,” concluded Adams.

Conference Call, Webcast, Investor Presentation and Investor Information
The Shyft Group will host a conference call for analysts and portfolio managers at 10 a.m. EDT today to discuss these results and current business trends.  The conference call and webcast will be available via:

Webcast: www.TheShyftGroup.com/investor-relations/webcasts  
Conference Call: 1-877-317-6789 (domestic) or 412-317-6789 (international); passcode: 10155593

For more information about The Shyft Group, please visit www.TheShyftGroup.com

About The Shyft Group
The Shyft Group is the North American leader in specialty vehicle manufacturing, assembly, and upfit for the commercial, retail, and service specialty vehicle markets. Our customers include first-to-last mile delivery companies across vocations, federal, state, and local government entities; the trades; and utility and infrastructure segments. The Shyft Group is organized into two core business units: Shyft Fleet Vehicles & Services™ and Shyft Specialty Vehicles™. Today, its family of brands include Utilimaster®, Royal Truck Body™, DuraMag® and Magnum®, Strobes-R-Us™, Spartan RV Chassis™, Builtmore Contract Manufacturing™, and corresponding aftermarket provisions. The Shyft Group and its go-to-market brands are well known in their respective industries for quality, durability, and first-to-market innovation. The Company employs approximately 2,900 associates across campuses, and operates facilities in Michigan, Indiana, Maine, Pennsylvania, South Carolina, Florida, Missouri, California, Arizona, Texas, and Saltillo, Mexico. The Company reported sales from continuing operations of $676 million in 2020. Learn more about The Shyft Group at www.TheShyftGroup.com.  

This release contains several forward-looking statements that are not historical facts, including statements concerning our business, strategic position, financial projections, financial strength, future plans, objectives, and the performance of our products and operations.  These statements can be identified by words such as “believe,” “expect,” “intend,” “potential,” “future,” “may,” “will,” “should,” and similar expressions regarding future expectations.  Furthermore, statements contained in this document relating to the global outbreak of the novel coronavirus disease (COVID-19), the impact of which remains inherently uncertain on our financial results, are forward-looking statements.  These forward-looking statements involve various known and unknown risks, uncertainties, and assumptions that are difficult to predict with regard to timing, extent, and likelihood.  Therefore, actual performance and results may materially differ from what may be expressed or forecasted in such forward-looking statements. Factors that could contribute to these differences include future developments relating to the COVID-19 pandemic, including governmental responses, supply chain shortages, and potential labor issues; operational and other complications that may arise affecting the implementation of our plans and business objectives; continued pressures caused by economic conditions including weaknesses resulting from the COVID-19 pandemic; challenges that may arise in connection with the integration of new businesses or assets we acquire or the disposition of assets; restructuring of our operations, and/or our expansion into new geographic markets; issues unique to government contracting, such as competitive bidding processes, qualification requirements, and delays or changes in funding; disruptions within our dealer network; changes in our relationships with major customers, suppliers, or other business partners; changes in the demand or supply of products within our markets or raw materials needed to manufacture those products; and changes in laws and regulations affecting our business.  Other factors that could affect outcomes are set forth in our Annual Report on Form 10-K and other filings we make with the Securities and Exchange Commission (SEC), which are available at www.sec.gov or our website.  All forward-looking statements in this release are qualified by this paragraph.  Investors should not place undue reliance on forward-looking statements as a prediction of actual results.  We undertake no obligation to publicly update or revise any forward-looking statements in this release, whether as a result of new information, future events, or otherwise.

CONTACT: 

Juris Pagrabs
Group Treasurer
The Shyft Group
(517) 997-3862   

              

The Shyft Group, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except par value)

(Unaudited)

 

June 30,

 

December 31,

 
 

2021

 

2020

 

ASSETS

       

Current assets:

       

Cash and cash equivalents

$            4,178

 

$          20,995

 

Accounts receivable, less allowance of $136 and $116

101,879

 

64,695

 

Contract assets

15,370

 

9,414

 

Inventories, net

68,420

 

46,428

 

Other receivables – chassis pool agreements

13,983

 

6,503

 

Other current assets

8,859

 

8,172

 

Total current assets

212,689

 

156,207

 
         

Property, plant and equipment, net

54,335

 

45,734

 

Right of use assets – operating leases

41,905

 

43,430

 

Goodwill

48,677

 

49,481

 

Intangible assets, net

54,684

 

56,386

 

Other assets

1,162

 

2,052

 

Net deferred tax asset

5,625

 

5,759

 

TOTAL ASSETS

$        419,077

 

$       359,049

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

       

Current liabilities:

       

Accounts payable

$          74,749

 

$          47,487

 

Accrued warranty

6,623

 

5,633

 

Accrued compensation and related taxes

17,799

 

17,134

 

Deposits from customers

377

 

756

 

Operating lease liability

7,495

 

7,508

 

Other current liabilities and accrued expenses

9,774

 

8,121

 

Short-term debt – chassis pool agreements

13,983

 

6,503

 

Current portion of long-term debt

253

 

221

 

Total current liabilities

131,053

 

93,363

 
         

Other non-current liabilities

4,628

 

5,447

 

Long-term operating lease liability

35,182

 

36,662

 

Long-term debt, less current portion

23,198

 

23,418

 

Total liabilities

194,061

 

158,890

 

Shareholders’ equity:

       

Preferred stock; 2,000 shares authorized (none issued)

 

 

Common stock; 80,000 shares authorized; 35,346 and 35,344 outstanding

92,309

 

91,044

 

Retained earnings

131,853

 

109,286

 

Total The Shyft Group, Inc. shareholders’ equity

224,162

 

200,330

 

Non-controlling interest

854

 

(171)

 

Total shareholders’ equity

225,016

 

200,159

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$        419,077

 

$       359,049

 
             

 

The Shyft Group, Inc. and Subsidiaries

Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

                                 
   

Three Months Ended June 30,

   

Six Months Ended June 30,

 
   

2021

   

2020

   

2021

   

2020

 
                                 

Sales

 

$

243,982

   

$

123,970

   

$

441,870

   

$

300,918

 

Cost of products sold

   

192,076

     

99,965

     

349,978

     

240,612

 

Gross profit

   

51,906

     

24,005

     

91,892

     

60,306

 
                                 

Operating expenses:

                               

Research and development

   

940

     

1,130

     

1,722

     

2,672

 

Selling, general and administrative

   

28,740

     

24,610

     

53,277

     

46,009

 

Total operating expenses

   

29,680

     

25,740

     

54,999

     

48,681

 
                                 

Operating income (loss)

   

22,226

     

(1,735)

     

36,893

     

11,625

 
                                 

Other income (expense):

                               

Interest expense

   

(227)

     

(460)

     

(57)

     

(1,191)

 

Interest and other income

   

506

     

515

     

689

     

5

 

Total other income (expense)

   

279

     

55

     

632

     

(1,186)

 
                                 

Income (loss) from continuing operations before income taxes

   

22,505

     

(1,680)

     

37,525

     

10,439

 

Income tax expense (benefit)

   

5,552

     

(546)

     

9,042

     

(169)

 

Income (loss) from continuing operations

   

16,953

     

(1,134)

     

28,483

     

10,608

 

Income (loss) from discontinued operations, net of income taxes

   

     

(157)

     

81

     

(4,021)

 

Net income (loss)

   

16,953

     

(1,291)

     

28,564

     

6,587

 

Less: net income attributable to non-controlling interest

   

990

     

70

     

1,025

     

137

 
                                 

Net income (loss) attributable to The Shyft Group Inc.

 

$

15,963

   

$

(1,361)

   

$

27,539

   

$

6,450

 
                                 

Basic earnings (loss) per share

                               

Continuing operations

 

$

0.45

   

$

(0.03)

   

$

0.78

   

$

0.29

 

Discontinued operations

   

     

(0.01)

     

     

(0.11)

 

Basic earnings (loss) per share

 

$

0.45

   

$

(0.04)

   

$

0.78

   

$

0.18

 
                                 

Diluted earnings (loss) per share

                               

Continuing operations

 

$

0.44

   

$

(0.03)

   

$

0.76

   

$

0.29

 

Discontinued operations

   

     

(0.01)

     

     

(0.11)

 

Diluted earnings (loss) per share

 

$

0.44

   

$

(0.04)

   

$

0.76

   

$

0.18

 
                                 

Basic weighted average common shares outstanding

   

35,333

     

35,512

     

35,322

     

35,456

 

Diluted weighted average common shares outstanding

   

36,190

     

35,512

     

36,191

     

35,693

 

 

 

The Shyft Group, Inc. and Subsidiaries

Sales and Other Financial Information by Business Segment

(Unaudited)

 

Three Months Ended June 30, 2021 (in thousands of dollars)

 
 
   

Business Segments

     
           
   

Fleet Vehicles &
Services

 

Specialty 
Vehicles

 

Other

 

Consolidated

 

Fleet vehicle sales

$     159,826

 

$               –

 

$                  –

 

$      159,826

 

Motorhome chassis sales

 

40,891

 

 

40,891

 

Other specialty chassis and vehicles

 

29,415

 

 

29,415

 

Aftermarket parts and assemblies

8,447

 

5,403

 

 

13,850

 

       Total Sales

 

$    168,273

 

$   75,709

 

$                  –

 

$      243,982

 
                   

Adjusted EBITDA

$      28,287

 

$     8,637

 

$      (8,354)

 

$        28,570

 

 

 

The Shyft Group, Inc. and Subsidiaries

 

Sales and Other Financial Information by Business Segment

 

(Unaudited)

 
   

Three Months Ended June 30, 2020 (in thousands of dollars)

 
   
   

Business Segments

     
           
   

Fleet Vehicles &
Services

 

Specialty 
Vehicles

 

Other

 

Consolidated

 

Fleet vehicle sales

$     90,762

 

$                –

 

$                 –

 

$      90,762

 

Motorhome chassis sales

 

14,048

 

 

14,048

 

Other specialty chassis and vehicles

 

10,929

 

 

10,929

 

Aftermarket parts and assemblies

6,476

 

1,755

 

 

8,231

 

       Total Sales

 

$     97,238

 

$     26,732

 

$                –

 

$      123,970

 
                   

Adjusted EBITDA

$         13,652

 

$      1,219

 

$     (5,521)

 

$          9,350

 

 

Sales and Other Financial Information by Business Segment

 

(Unaudited)

 
                   

Period End Backlog (amounts in thousands of dollars) 

 
 
 

Jun. 30, 2021

 

Mar. 31, 2021

 

Dec. 31, 2020

 

Sept. 30, 2020

 

Jun. 30, 2020

Fleet Vehicles and Services*

$  660,908

 

$  589,604

 

$  427,338

 

$  228,870

 

$  286,955

      Motorhome Chassis*

56,294

 

42,742

 

31,580

 

40,387

 

38,804

      Other Vehicles

33,840

 

33,716

 

19,431

 

11,036

 

11,621

 Aftermarket Parts and Accessories

382

 

438

 

302

 

333

 

115

Total Specialty Vehicles

90,516

 

76,896

 

51,313

 

51,756

 

50,540

                   

Total Backlog

$  751,424

 

$  666,500

 

$  478,651

 

$  280,626

 

$  337,495

 

* Anticipated time to fill backlog orders at June 30, 2021; five – twelve months for Fleet Vehicles and Services; less than three months for Specialty Vehicles.

                     

Reconciliation of Non-GAAP Financial Measures
This release presents Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization), adjusted net income, and adjusted earnings per share, each of which is a non-GAAP financial measure. These non-GAAP measures are calculated by excluding items that we believe to be infrequent or not indicative of our underlying operating performance, as well as certain non-cash expenses. We define Adjusted EBITDA as income from continuing operations before interest, income taxes, depreciation and amortization, as adjusted to eliminate the impact of restructuring charges, acquisition related expenses and adjustments, non-cash stock-based compensation expenses, and other gains and losses not reflective of our ongoing operations.

We present the non-GAAP measure Adjusted EBITDA because we consider it to be an important supplemental measure of our performance. The presentation of Adjusted EBITDA enables investors to better understand our operations by removing items that we believe are not representative of our continuing operations and may distort our longer-term operating trends. We believe this measure to be useful to improve the comparability of our results from period to period and with our competitors, as well as to show ongoing results from operations distinct from items that are infrequent or not indicative of our continuing operating performance. We believe that presenting this non-GAAP measure is useful to investors because it permits investors to view performance using the same tools that management uses to budget, make operating and strategic decisions, and evaluate our historical performance. We believe that the presentation of this non-GAAP measure, when considered together with the corresponding GAAP financial measures and the reconciliations to that measure, provides investors with additional understanding of the factors and trends affecting our business than could be obtained in the absence of this disclosure.

Our management uses Adjusted EBITDA to evaluate the performance of and allocate resources to our segments. Adjusted EBITDA is also used, along with other financial and non-financial measures, for purposes of determining annual incentive compensation for our management team and long-term incentive compensation for certain members of our management team.

Financial Summary

(In thousands, except per share data)

(Unaudited)

             
 

Three Months Ended June 30,

 

The Shyft Group, Inc.

2021

% of
sales

 

2020

% of
sales

 

Income (loss) from continuing operations

$     16,953

6.9%

 

$     (1,134)

(0.9%)

 

Net (income) loss attributable to non-controlling interest

(990)

   

(70)

   

Add (subtract): 

           

Restructuring and other related charges

505

   

562

   

Acquisition related expenses and adjustments

71

   

179

   

Non-cash stock-based compensation expense

2,850

   

2,126

   

Loss from write-off of construction in process

   

2,430

   

Accelerated depreciation of property, plant and equipment

   

2,330

   

Loss from liquidation of JV

643

   

   

Tax effect of adjustments

(998)

   

(1,849)

   

Adjusted net income

$     19,034

7.8%

 

$      4,574

3.7%

 
             

Income (loss) from continuing operations

$      16,953

6.9%

 

$      (1,134)

(0.9%)

 

Net (income) loss attributable to non-controlling interest

(990)

   

(70)

   

Add (subtract): 

           

Depreciation and amortization

2,759

   

5,343

   

Taxes on income

5,552

   

(546)

   

Interest expense

227

   

460

   

EBITDA

$     24,501

10.0%

 

$      4,053

3.3%

 
             

Add (subtract): 

           

Restructuring and other related charges

505

   

562

   

Acquisition related expenses and adjustments

71

   

179

   

Non-cash stock-based compensation expense

2,850

   

2,126

   

Loss from liquidation of JV

643

   

   

Loss from write-off of construction in process

   

2,430

   

Adjusted EBITDA

$   28,570

11.7%

 

$     9,350

7.5%

 
             

Diluted net earnings per share

$       0.44

   

$       (0.03)

   

Add (subtract): 

           

Restructuring and other related charges

   

0.02

   

Acquisition related expenses and adjustments

   

0.01

   

Non-cash stock-based compensation expense

0.08

   

0.06

   

Loss from liquidation of JV

0.01

   

   

Loss from write-off of construction in process

   

0.06

   

Accelerated depreciation of property, plant and equipment

   

0.06

   

Tax effect of adjustments

   

(0.05)

   

Adjusted diluted net earnings per share

$       0.53

   

$       0.13

   
                     

 

Financial Summary (Non-GAAP)

Consolidated

(In thousands, except per share data)

(Unaudited)

               
     

 Forecast

     

Twelve Months Ended December 31, 2021

The Shyft Group, Inc.

   

Low

 

Mid

 

High

Income from continuing operations

   

$           54,728

 

$           58,723

 

$           62,028

Add: 

             

Depreciation and amortization

   

13,462

 

13,462

 

13,462

Interest expense

   

1,295

 

1,295

 

1,295

Taxes

   

19,093

 

20,098

 

21,793

EBITDA

   

$           88,578

 

$           93,578

 

$           98,578

Add (subtract): 

             

Non-cash stock-based compensation and other charges

   

11,422

 

11,422

 

11,422

Adjusted EBITDA

   

$        100,000

 

$        105,000

 

$        110,000

               

Earnings per share

   

$               1.52

 

$               1.62

 

$               1.72

Add: 

             

Non-cash stock-based compensation and other charges

   

0.32

 

0.32

 

0.32

Less tax effect of adjustments

   

(0.09)

 

(0.09)

 

(0.09)

Adjusted earnings per share

   

$               1.75

 

$               1.85

 

$               1.95

 

Cision View original content:https://www.prnewswire.com/news-releases/the-shyft-group-reports-second-quarter-results-301349192.html

SOURCE The Shyft Group, Inc.